Breaking News on Food, Beverage & Supplement Development - Asia PacificEU edition | US edition

Headlines > Business

Chinese organic dairy Shengmu launches expansion-driven IPO

Post a comment

By Mark Astley+

Last updated on 01-Jul-2014 at 16:33 GMT

Chinese organic dairy Shengmu launches expansion-driven IPO

Shengmu Organic, China's largest organic dairy player, is seeking to raise up to HK$1.3bn (US$169m, €124m) through an initial public offering (IPO) of shares in Hong Kong.

Sponsored by Goldman Sachs and BOC International, the IPO opened yesterday with an offer of 444.8m shares priced at between HK$2.39 (US$0.31, €0.26) and HK$2.95 (US$0.38, €0.28).

Through the initial offering , which will remain open until July 7 2014, Shengmu Organic could raise between HK$1.063bn (US$137m, €100m) and HK$1.312bn (US$169m, €124m) - much of which will be spent expanding the dairy's milk production.

Around a tenth of the offer shares - 44.48m to be exact - will be offered in Hong Kong and the rest internationally. An extra 66.72m shares could be issued in a follow-up offering, Shengmu said. 

Bau Hua, a subsidiary of COFCO Agricultural Industrial Equity Investment Fund, has committed to buying US$30m (HK$232.5m, €21.9m) worth of shares, the Wall Street Journal reported.

Shengmu Organic will float on the Hong Kong Stock Exchange on July 15 2014.


As well marketing around 20,700 tonnes of liquid dairy products in 2013, Shengmu Organic supplied more than 68,500 tonnes of organic raw milk and nearly 111,5000 tonnes of unpasteurized milk to the likes of Mengniu, Yili, and Want Want.

While supplying raw milk currently accounts for a larger proportion of its business, the organic milk is produces is "increasingly sold after processing as liquid milk products under our Shengmu brand," said the company in a post offering information pack.

In line with increasing demand from consumers and its customers, Shengmu Organic intends to plough around a quarter of the cash raised through the IPO into the construction of six new dairy farms over the next 18 months.

The firm also plans to invest 30% of the raised capital to increase its herd of more than 91,000 cows - 30,621 across 13 organic farms and 60,457 on its 12 non-organic sites - by 15,000 in 2014 in 2015.

What's remaining will be set aside to expand its milk processing capabilities (15%), to repay its bank borrowings (15%), on marketing and promotions (5%), and to top up its general working capital (10%).

Subscribe to our FREE newsletter

Get FREE access to authoritative breaking news, videos, podcasts, webinars and white papers. SUBSCRIBE

Post a comment

Comment title *
Your comment *
Your name *
Your email *

We will not publish your email on the site

I agree to Terms and Conditions

These comments have not been moderated. You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment. Any comment that violates these terms may be removed in its entirety as we do not edit comments. If you wish to complain about a comment please use the "REPORT ABUSE" button or contact the editors.

Related products

Key Industry Events


Access all events listing

Our events, Events from partners...